Europe’s Cobalt Strategy: Insights from the Draghi Report

Europe’s Cobalt Strategy: Insights from the Draghi Report

The Draghi report, published in September 2024, outlines a roadmap for the European Union’s industrial competitiveness. With a clear focus on securing critical raw materials like cobalt, the report sets out key actions to enhance recycling efforts and boost the bloc refining and financing capabilities. These recommendations are essential for Europe’s green transition and for ensuring long-term stability in the global cobalt supply chain, particularly in light of growing global geopolitical tensions.

In September 2024, the former Italian Prime Minister Mario Draghi published his report “The Future of European Competitiveness”. Warranted by European Commission President Ursula von der Leyen, the Draghi report outlines a roadmap for the European Union's industrial strategy to address growing global geopolitical tensions. With global supply chain disruptions and European Union’s energy transition at a juncture, securing critical raw materials (CRMs) has become more urgent than ever. Therefore, the report’s recommendations come at a crucial moment as Europe tries to strengthen its industrial base.

One of the report’s contributions is its emphasis on cobalt. As the EU transitions toward a greener and more sustainable economy, cobalt is increasingly essential for sectors such as electric vehicles and renewable energy technologies. The Draghi report recognizes this importance and highlights several actions Europe must take to secure the supply of cobalt and other CRMs:

1. Develop a coordinated strategy covering the entire value chain: Europe needs a comprehensive strategy from raw materials to final products. Draghi calls for raising the level of involvement of national governments and the EU, including through trade policies, scale-up financing, diversification of supply sources and products, integration of EU producers in global value chains, and promotion of the domestic supply chain. 
2. Encouraging recycling efforts: The report stresses the need for Europe to increase its recycling capacity for cobalt drastically. Currently, the continent is falling short in its ability to recycle materials from used batteries, leading to a potential loss of critical resources. 
3. Establishing a dedicated EU Critical Raw Materials Platform: The report calls for developing a comprehensive EU strategy from mining to recycling and establishing a dedicated EU Critical Raw Materials Platform to leverage market power.
4. Increasing domestic refining and processing capabilities: Europe’s cobalt refining capacity is limited. The Draghi report calls for the development of domestic refining infrastructure to reduce Europe's dependency on external actors.
5. Developing financial tools to de-risk investments: Mining activities are currently excluded from EU financial support, and Draghi argues there is a need to develop financial tools to de-risk investments (such as Contracts-for-Difference) and strengthen the role of the European Investment Bank.
6. Establishing strategic stockpiles: Another critical recommendation is to establish EU-wide strategic reserves of cobalt to help Europe navigate price volatility and provide security in times of scarcity or geopolitical tensions.

The Draghi report presents a clear message for the industry: Europe’s industrial future depends on securing its cobalt and critical raw materials supply. While the document is expected to influence the next EU political mandate (2024-2029), it remains to be seen how many of its recommendations will be adopted. If fully implemented, these measures would help Europe secure its imports, strengthen its economic resilience, boost domestic production and recyclability, leading the way in sustainable industrial practices for the global supply chain. The Cobalt industry will need to monitor the EU policy space to stay ahead of new regulations stemming from the report and seize any potential opportunities.